New research has found that as many as 85% of contractors do not trust HMRC’s new digital tool.

The Employment Status Service – or ESS for short – has faced a swathe of criticism both during its initial development and now into its launch period.

Claims were recently made against HMRC that the ESS tool helped facilitate tax avoidance. Though the organisation vehemently denied this, concerns among the contractor community have clearly been raised.

And now research from Qdos Contractor, who spoke to more than 1,500 contractors, confirms this to be the case.

The research found that 85% of contractors did not trust the tool to make accurate IR35 decisions.

Following the changes to IR35 in the public sector in early April, almost 90% of public sector organisations have contacted contractors regarding the changes, the research states. Before the 6 April date, only 30% had done so.

Interestingly, 31% of contractors surveyed have seen a change to their IR35 status, while 62% haven’t seen a change. 7% of contractors surveyed are still waiting for a decision about their IR35 status to be made.

“That such a high proportion of contractors just don’t trust the very tool used by many public sector clients and agencies to determine their IR35 status is worrying,” commented Seb Maley, CEO of Qdos Contractor. “On release, the tool was found to give inconsistent results, and regular changes and on-the-go updates have hardly helped. While many contractors surveyed have not seen any change to their IR35 status, that isn’t to say any tweaks made to the ESS Tool going forward won’t change the initial decision. We’re noticing that contractors undertaking very similar projects are being given completely different results, along with some blanket decisions given to entire contractor workforces. Given how much rests on this, it’s important that a fair, accurate and proper test is carried out, with each case looked at individually.

The research ultimately confirms that many contractors harbour a distrust of something they feel in the main is not designed to accurately define their working status.

Should you want some peace of mind, we offer a full contract review amongst other services to help you prepare for IR35. We’ll give a pass or fail based on the current contract you hold, along with comprehensive comments on how to improve any problem areas.

We also offer IR35 investigation insurance, plus representation from our Head of Tax and resident IR35 expert Andy Vessey ATT should it go to tribunal.

For any further information or advice, please call us on 01163 800 400 or drop us an email. Alternatively, take a look around our Knowledge Hub for more IR35 advice, industry news and contractor guides.